US and Global Developments in AML/CFT: A Broad View

1

Overview of US AML/CFT Regime

• 2006 FATF Mutual Evaluation Report – Primary Challenges – Strengths and Weaknesses

• Follow-up Actions and Developments • New Issues and Developments

2

Global Developments in AML/CFT

• Overview of Global Framework • Primary Conclusions of 3rd Round of AML/CFT

Assessments • Revisions to FATF Standards and 4th Round

Methodology • Sanctions and Targeted Financial Measures at

the UN

3

Where are we headed?

• Focus on Effectiveness and Implementation • Preventive Measures: Harmonizing, rationalizing and

enforcing compliance expectations • Investigative Measures: Prioritizing financial investigations

of third party money laundering and exploiting financial information with all-source intelligence

• Financial Measures: Closing vulnerabilities in the financial system and targeting key illicit financing networks and assets

• International Cooperation: Proactive and diagonal information sharing; identifying and addressing key information sharing constraints

• CIF and rationalizing AML/CFT more broadly

4

Financial Action Task Force Recommendation 32 on Cash Couriers: A

Perspective from South Asia Deloitte Future of Financial Crime Speaker

Series January 15, 2013

By Amit Kumar, Ph.D.

Fellow for Homeland Security and Counterterrorism

Center for National Policy

Organization of the Presentation

• FATF Measures outlined in Recommendation 32 • Cash couriers and their Role in Money Laundering/Terrorist Financing • Cash couriers as vehicles to move terrorist Funds • Advantages /Disadvantages of cash couriers vs. hawalas • Cash couriers—causes for concern • Agencies involved • Why South Asia is a fertile ground for use of cash couriers for TF/AML

Activity? • US Money Laundering Statute • Implementation of Recommendation 32 in South Asian States • Terrorist Groups using Cash Couriers in South Asia and the Gulf connection • Legislative Measures required for effective implementation • Scorecard- which states are successful/failing in implementation • US Role in improving implementation of R 32 in South Asia • Strategies for Improving Implementation of R 32

FATF Measures in Recommendation 32 • Measures in place to detect physical cross-border

transportation of cash and negotiable instruments • Ensuring that competent officials have the appropriate legal

authority to enforce the measures • Ensuring that effective, proportionate, and dissuasive sanctions

are available to deal with violators, including the ability to seize and forfeit the funds

• Declaration-persons are required to pro-actively submit a truthful declaration to the designated competent authorities

• Disclosure-persons are required to make a truthful disclosure to the designated competent authorities upon request

Cash Couriers and Their Role in Money Laundering/Terrorist Financing

• Cash couriers are natural persons who physically transport currency on their

person or accompanying luggage from one jurisdiction to another • Bulk Cash Smuggling is the act of making a physical cross-border transportation

of currency in large volumes where the currency is concealed in order to evade the reporting requirement, often using vehicles or containerized cargo or mail

• Terrorist Financing Cycle-Raise, Move, Store, Launder, and Deploy Funds • Moving funds through Charities, Hawala, and Cash Couriers • Funds could be proceeds of crime or licit (clean) sources like charities and

businesses • Cash Couriers could be transporting funds to be used for terrorism • Cash Couriers could be transporting proceeds of crime • Both these kind of funds need to be laundered (cleaned) to disguise their source of

origin to ward off detection by law enforcement of sources and destination of funds

Cash Couriers and Their Role in Money Laundering/Terrorist Financing

• Criminal proceeds or funds obtained for terrorist purposes could be placed in the banking system; used in trading/retail activity; or placed in the informal banking system

• Cash couriers are involved in the placement stage in Money Laundering

• Placement involves physical movement of currency derived from illegal activities to a place or into a form that is less suspicious to law enforcement and more convenient to criminal/terrorist

• Placement is followed by Layering and Integration Stages of Money Laundering

Cash Couriers as Vehicles to Move Funds

• Movement of funds through containerized cargo • Movement of funds through post • Movement of funds through human cash couriers

Cash Couriers vs. Hawala

• Cash couriers have no intermediaries whereas hawala has hawaladars (intermediaries) which may or may not be trusted

• Cash couriers can transport greater value (high denominations of cash and/or precious metals) whereas hawala results in transfers of lesser value

• Cash provides anonymity and precious metals can preserve their value

• Cash couriers used by hawaladars to settle their accounts as well as used in trade based money laundering

Cash Couriers: Causes for concern • Not Being Able to detect cash transported through couriers • Cash transported may have nexus to TF/ML • False Declarations/Disclosures by cash couriers • Avoidance of Declarations/Disclosures by cash couriers • Sources and Destination of Cash Transported Unknown

Agencies involved in monitoring, targeting, interdicting, investigating cash couriers

• Customs Agencies • Law Enforcement Agencies • Financial Intelligence Units • Bank/Financial Sector Supervisors • Tax Authorities

Sanctions against Cash Couriers

• Seizures of Cash at border checkpoints/airports/seaports • Arrests of Couriers • Confiscation/Forfeiture /freezing of assets seized • Fines • Investigations

Why South Asia is a fertile ground for use of cash couriers for TF/ML Activity?

• Cash based economies • Huge remittances from expatriates living in the Gulf • Modern banking facilities not easily accessible • Proceeds of crime (drug) need to be laundered and moved without detection

by law enforcement; drug flow from Afghanistan to Iran and Pakistan • Proceeds of Drug trade in Afghanistan and D-Company in the Indian

Subcontinent and Dubai need to be laundered • Cash declaration, disclosure, detection systems inadequate • Laws regards implementation of R 32 a work in progress • Porous poorly policed borders create conducive environment • AML/CFT laws work in progress and difficulty in establishing nexus of

cash couriers to ML/TF • Billions of dollars in US aid to Afghanistan diverted due to corruption

US Money Laundering Statute

• 18 U.S.C. Section 1956(a)(2) outlaws the international transportation or transmission (or attempted transportation or transmission) of funds

• (1) with the intent to promote a predicate offense; • (2) knowing that the purpose is to conceal laundering of the

funds and knowing that the funds are the proceeds of a predicate offense; or

• (3) knowing that the purpose is to avoid reporting requirements and knowing that the funds are the proceeds of a predicate offense.

•

Implementation of R 32 in South Asian States-India • Low number of currency declarations, detected false

declarations, and cash seizures including seizures of unaccompanied cash

• Declarations/disclosures applicable only to cash couriers via airports; no information of cash couriers through land or sea borders and unaccompanied cash movement through postal or cargo systems

• Legislation inadequate with relation to attachment, seizure, and freezing of property related to terrorist financing; with the enactment of PMLA Amendment Act (2012) as long as there is evidence of money laundering even without conviction, property involved in ML can be attached.

Implementation of R 32 in South Asian States-Pakistan

• Partial declaration system focused on foreign exchange control rather than AML/CFT and covers transportation of foreign currency out of Pakistan but does not cover transportation of foreign currency into Pakistan nor any movement of Pakistani rupees

• State Bank of Pakistan and Customs authorities do not share declaration information with the FMU (FIU)

• Customs authorities do not share information with the FMU upon discovery of a false declaration; Customs cannot investigate ML

• Customs authorities do not share information with FMU when they have a suspicion of ML/TF

• Implementation of R 32 regime is ineffective; Sanctions very modest • Cash couriers major source of funding for terrorist activities • Bulk cash smuggling punishable by up to 5 years in prison; • Greater attention needed in identifying and targeting cash couriers

Implementation of R 32 in South Asian States-Pakistan

• No law prevents prosecution of legal persons for criminal offences in case

of false declarations/disclosure • Customs not empowered to investigate TF/ML; it has to pass on such cases

to FIA and other appropriate agencies.

Implementation of R 32 in South Asian States-Afghanistan

• No cross border currency declaration enforced for inbound passengers • Limited implementation of cross border currency declaration regime for

outbound passengers (only implemented at KIA and excluding the VIP Section)

• Currency declaration threshold prescribed by the AML/LD exceeds the US$/EUR 15000 threshold

• Failure to declare currency in the amount equal to or exceeding Af 1000,000 (US $ 20,000 ) upon entry or departure is punishable by a fine equal to the value of the currency

• No legal stipulation for monitoring or sanctioning false cross border currency declarations

• Customs authorities arrest individuals carrying undeclared currency, a power not delegated to Customs and not prescribed in the decree

• Greater attention needed in identifying and targeting cash couriers

Implementation of R 32 in South Asian States-Afghanistan

• Cash couriers transiting KIA or crossing land border must declare carried cash in

excess of $20,000 • Effective implementation of legal framework hampered because the AML Legal

Decree (LD) does not delineate clear lines of responsibility among the 3 authorized implementing agencies, namely Customs, Police, and FIU

• Customs lacks the professional capacity to handle the scale of the problem • Customs not maintaining detailed statistics of currency declarations or seizures • Absence of reporting of unusual movements of precious metals and stones to the

country of origin • Lack of cooperation with neighboring countries • Absence of adequate and uniform sanctions; sanctions not applied in accordance with

LD or that law enforcement has pursued investigation into ML/TF regards seized assets

• Customs, FIU, and police have authority to seize currency if its suspected of being tied to ML/TF; Customs seizes assets and arrests carrier, reports the incident to FIU and transfer the carrier to NDS for investigation

Implementation of R 32 in South Asian States-Nepal

• Declaration system lacks legal basis; geared towards foreign exchange control • Applicable for incoming passengers only at the one international airport • Not all entry points into Nepal covered by declaration system • Does not cover Nepali currency • Does not cover Nepali citizens, only foreigners • Gold and precious metals not covered in declaration form • Customs department does not share information with FIU • No effective coordination between Customs and FIU • Lack of effective implementation of declaration system • No effective monitoring system in place for controlling bulk cash smuggling and

cross border illegal movement of gold and precious metals • No system in place for confiscating currencies pursuant to UNSCR Sanctions Lists • No sanctions for non-compliance with provisions of recommendation 32

Implementation of R 32 in South Asian States-Bangladesh

• Cross border declaration system not targeted to detect cash couriers related to terrorist financing or money laundering

• Cross border declarations or reports of failure to declare are not forwarded to FIU • Inadequate coordination among customs, immigration and other related authorities

on issues related to implementation of R 32 • Inadequate sanctions available to implement the FERA and Customs Act

obligations • In case of suspicion of ML/TF, Customs can arrest carrier, seize items, and turn the

same over to ACC or Police for further investigation • No bar to application of ML/TF offenses to persons carrying currency that is

related to ML/TF • International cooperation not pursued in relation to R 32; treaties with India, Iran • Statistics not available to show effective implementation of measures to implement

R 32 • Customs does not maintain statistics on cross border transportation of currency

Implementation of R 32 in South Asian States-Maldives

• No declaration or disclosure system

Implementation of R32 in South Asian States-Sri Lanka • Declaration system in place for cross-border transportation of currency but

no mechanism to ascertain origin of currency and its intended use in relation to ML/TF

• Exchange Control Act and FTRA Act mandate modest sanctions for non-compliance

• No system in place to maintain comprehensive statistics or pass on information relating to declarations of cross-border transportation to the FIU when established

• False declarations are a Customs violation only • Customs can request carrier of cross-border foreign currency to make a

declaration even if the currency carried is less than declaration threshold of USD 10,000

Illicit Financial Flows (2001-2010)

Country Illicit Flows (2001-2010) in millions of USD

Per Capita Illicit Flows (2001-2010) in millions of USD

India 123324 113 Pakistan 2506 15 Afghanistan 2157 85 Nepal 8013 285 Bangladesh 14059 90 Maldives 518 1827 Sri Lanka 1527 220 Saudi Arabia 209962 7443 UAE N.A. 24199 Kuwait 24190 9228 Qatar 25443 47242

UAE Expat Remittances up 15 percent in 2012

• Remittances from UAE rise from USD 11.19 billion in 2011 to USD 12.87 billion in 2012

• Remittance from expats across GCC rose from USD 73.69 billion in 2011 to USD 82.96 billion in 2012

• India was the number one recipient with USD 30 billion of this amount

• India globally received USD 70 billion in 2012 • Pakistan and Bangladesh also received high remittances

Terrorist Groups/Criminals using Cash Couriers in South Asia and the Gulf

connection

• Expat Indian and Pakistani communities in Gulf send remittances to India and Pakistan

• Taliban, LeT, HuM, IM, and other South Asian terrorist groups transporting cash from UAE, Saudi Arabia, Qatar, and Kuwait to South Asia—Afghanistan, Pakistan, and India; Presence of Afghan and Pakistan expatriates in Gulf; drug proceeds as source of TF and ML activity for Taliban; Cash couriers attacked by criminal groups in Afghanistan; LeT cadres carry cash from Pakistan to Indian part of Kashmir; Pakistani and Afghani expats in Saudi Arabia sending cash to Pakistan and Afghanistan); Times Square Bomber; Abu Jindal

• Rich Afghans (PEPs, criminals terrorists) transporting cash and from Afghanistan to invest in Dubai, UAE.

• Gold smuggling from Afghanistan to UAE; Iranians buying gold with Iranian rials or oil in Western Afghanistan; gold transported to Dubai where Iranians trade it for dollars which are funneled back to China or even Iran

• Fake Indian currency notes produced in Pakistan circulated and distributed in India through the porous Indo-Nepal border, Indo-Bangladesh border and through by air via Dubai; Thailand, Malaysia, Myanmar, and Sri Lanka are also transit points; involvement of LeT and D-Company and other criminal syndicates use Nepal and Bangladesh borders with India; D-Company bar girls

Terrorist Groups/Criminals using Cash Couriers in South Asia and the Gulf connection

• Saudi efforts to implement controls in formal financial sector have forced charities and individuals to use cash couriers by transporting cash below declaration limits– challenges in cash transfers during Hajj

• UAE of particular concern with relation to cash couriers and bulk cash smuggling; major origin, destination, or trans-shipment point for goods and cash; major investment destination

• AQ--KSM gave 200,000 USD to Abdul Aziz Ali in Kuwait who transferred to 9/11 hijackers in US

• Couriers between South Asia and Gulf use indirect flights between origin and destination, large number of couriers, frequent exchanges of money

• Pakistani radicals send money to UK through flights headed for UK • Cash couriers transporting cash from Sri Lanka to Singapore, Sri Lankan

authorities believe these were funds for use by LTTE • Cash couriers from Thailand, Malaysia, Vietnam, and Philippines arrested

in Nepal and Bangladesh while they were transporting FICN

Implementation of Recommendation 32 in UAE

• Inconsistent Reporting of the enforcement system • No limit on outflow of currency; recently been instituted • Fine of AED 2000 to AED 100000 (USD 600 to 30000) for failure to

declare/disclose • No special sanctions for transportation for the purpose of ML/TF • CFT law provides for TF activity, no special law for TF through cash

couriers • Writ of UAE Central Bank may not be observed by Dubai Financial

Services Authority

Legislative Measures required for effective implementation of R 32-India

• Confiscation of property laundered not covered in relevant legislation

and depends on a conviction for a scheduled predicate offence; Now amended as per PMLA Amendment Act, 2012

• UAPA does not allow for confiscation of intended instrumentalities used in terrorist acts or funds collected to be used by terrorists; Now amended

• UAPA and the NDPS Act do not allow for property of corresponding value to be confiscated

• No clear procedures to deal with assets in case of criminal proceedings when suspect died

• Limited number of confiscations related to ML/TF offences • Production and circulation of counterfeit currency included as a

terrorist financing offence in UAPA Amendment Act, 2012

Legislative Measures required for effective implementation of R 32-Pakistan

• Legislation to empower to detect, interdict, seize, and sanction cases of cash couriers needed

• Law should provide for regulation of inbound foreign currency

• Law should authorize sharing of information with FMU when there is a suspicion of ML/TF

• Law should provide for declaration/disclosure system that achieves AML/CFT objectives and covers all forms of currency

• Law to provide for sanctions for non-compliance and nexus to ML/TF need to be dissuasive and enforceable

Legislative Measures required for effective implementation of R 32-Afghanistan

• Customs Act should make direct reference to transportation of currency • Provide customs with the authority to stop or restrain cash for a reasonable

time to ascertain whether evidence of ML/TF may be found if there is suspicion of ML/TF activity or a false declaration

• Establish in law for effective, proportionate, and dissuasive sanctions for false cross-border currency declarations

• Establish in law effective, proportionate, and dissuasive sanctions for transportation of currency that is related to ML/TF

• Establish in law that declaration threshold does not exceed US $/Euro 15,000

Legislative Measures required for effective implementation of R 32-Nepal

• Laws should address false declarations and non-declarations • Laws should address all instruments defined as currency and passenger,

cargo, and postal streams • Laws to provide for gold and precious metals in declaration forms • Law should include Nepali citizens in declaration system • Customs authority should ensure electronic database for currency movement

and movement of other precious metals • Law to provide for effective monitoring system for controlling bulk cash

smuggling and cross border illegal movement of gold and precious metals • Law should provide for confiscation and seizure of assets linked to ML/TF

part of action plan • Anti-Money Laundering ( First Amendment) in Asset Money Laundering

Prevention Act; problems remain in coverage of ancillary and predicate offenses

Legislative Measures required for effective implementation of R 32-Bangladesh

• Law should provide for comprehensive declaration/disclosure system designed to address ML/TF risks

• Law should provide for sanctions for non-compliance with FERA and Customs Act provisions

Legislative Measures required for effective implementation of R 32-Maldives

• Law to establish a declaration/disclosure system needed • Law should provide MCS to request information on the origin

and use of cash • Law to provide declaration threshold of US $ 11,000 for

physical transportation of currency

Legislative Measures required for effective implementation of R 32-Sri Lanka

• Law should provide for suspicious cross-border transportation incidents to be investigated by competent authorities in relation to the origin of the currency and its intended use

• Law should provide for declaration of transportation of precious metals and stones with information shared with the FIU

• Law should provide for sanctions relating to ML/TF nexus

Legislative Measures in UAE

• Law now provides for US $ 27,000 as both inbound and outbound declaration threshold

• Law should provide for clear delineation of authorities of UAE Central Bank and Dubai Financial Services Authority (DFSA)

Scorecard- which states are successful/failing in implementing R 32

• India- Partially Compliant • Pakistan-Non Compliant • Afghanistan-Non Compliant • Nepal-Non Compliant • Bangladesh-Partially Compliant • Maldives-Non Compliant • Sri Lanka-Non Compliant • UAE-Non Compliant • Saudi Arabia-Partially Compliant • Kuwait-Partially Compliant • Qatar- Non Compliant

The Role of the US in helping South Asia implement R 32

• India- Bilateral discussion on Production and Distribution of Counterfeit currency; jointly deter countries producing currency paper, ink, and machines making such currency; transfer of detection technology from US to India

• Pakistan- Designing and Implementing Robust Money Laundering Law • Afghanistan– Training in Detection and Targeting of Cash Couriers; Designation

of New Ansari Money Exchange, Haji Azizullah Alizai, Haji Juma Khan Organization, Haji Abdullah Barakzai Ansari, Haji Mohammad Khan, Haji Mohammad Jan, Haji Mohammad Rafi Azimi, Eissa Jan Abdul Qayoum, Rahamullah Mohammad Afzal. Ahmad Shah Hakimi, Ahmad Shah Money Exchange,; Need for extradition and MLAT as well as sharing seized assets

• UAE- DHS-ICE Cash Courier Operation; US Treasury involved for past several years to apprise UAE Government on ML/TF through cash couriers; collaboration with UAE to combat bulk cash smuggling; JTFCC

• Saudi Arabia-Training to Saudi Customs Service to identify cash couriers; intelligence to identify cash couriers with TF nexus

• Sri Lanka– Training of Customs officials in detecting and targeting cash couriers • Nepal—training in investigative techniques, awareness of policies, anti-terror law • ICE Cross Border Investigations Training Seminars on a bilateral basis

Strategies to improve implementation of R 32 in South Asia

• Legal- laws for declaration/disclosure; sanctions for non-compliance including freezing, seizing, confiscation of laundered funds; establishing nexus to TF/ML; origin and destination of funds; agency jurisdictions for arrests, investigations, prosecutions, and convictions for ML/TF; gems &

• Managerial- detection, risk-based targeting; information sharing between agencies; identification of cash couriers; database of seizures, arrests; training on TF/ML through cash couriers; financial resources; trained HR

• Political- political will; information sharing with other countries on the region on the origin and destination and identity of cash couriers

• Technological- detection equipment • Listing- designations of cash couriers linked to terrorist organizations • Risk based application of R 32 –country/region threats and vulnerabilities • Assessment criteria for implementation– convictions related to ML/TF;

seizures of cash; confiscation of cash.; STRs filed by customs/Law Enforcement, etc.

Contact Details Amit Kumar, Ph.D. Fellow for Homeland Security and Counterterrorism Center for National Policy Tel: 703-899-2255 Email: akumar@cnponline.org

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Introduction

Like in any other area of homeland security and counterterrorism, information sharing plays a critical role in Countering the Financing of Terrorism (CFT). This piece explores the critical role of information sharing in CFT efforts in India, and how India is benefiting and can benefit further from adopting the information sharing paradigm in its CFT efforts.

Countering the Financing of Terrorism Efforts in India

India has been a victim of terrorism and the carnage engendered by terrorists and their sympathizers for several decades. However, the CFT paradigm is relatively new for India. Even in the United States, the heightened interest in terrorist financing and CFT is mostly a post September 11, 2011 occurrence. While the United States has made great efforts nationally, bilaterally, and multilaterally to engineer a CTF effort over the last decade,

India has shown remarkable progress in this area more recently, especially since the November 2008 attacks in Mumbai, and the induction of the country into the Financial Action Task Force (FATF) in 2010.

Over the last couple of years India has made notable amendments both to its primary CFT law, the Unlawful Activities Prevention Act, and its main Anti Money Laundering (AML) law, the Prevention

of Money Laundering Act. These amendments concern the inclusion of the production, circulation, and distribution of counterfeit currency; and the confiscation of terrorist assets, respectively. These developments are undoubtedly heartening for a country that is developing a CFT infrastructure.

But enactment of laws alone, while necessary, is not sufficient to design and implement a robust CFT effort. A vital component of any CFT effort is the information sharing processes that make CFT implementation possible. There is thus a need to understand the role of information sharing in the CFT domain.

Information Sharing in the Context of CFT Efforts in India

Over the past year there has been a lot of talk about the establishment of a U.S.-like National Counter Terrorism Center (NCTC) in India. The immediate impetus for the idea of the NCTC came after the intelligence failures related to the Mumbai attacks in November 2008. The notion that somehow the setting up of an NCTC would serve as a panacea to the intelligence bottlenecks and the anemic information sharing processes related to terrorist threats may be

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The Criticality of Information Sharing in Countering the Financing of Terrorism Efforts in India

by Amit Kumar, Ph.D.Center for National Policy, Georgetown University, and George Mason University*

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more utopian than many in India would concede. Sure, since law and order is a state subject, and the proposed NCTC was supposed to have law enforcement powers, there are obvious concerns relating to the principle and practice of federalism coming under direct threat from the centrally established and run NCTC. What needs to be kept in mind is that the NCTC in the United States is the primary all source intelligence collection, analysis, and dissemination (information sharing) organization when it comes to terrorist threats.

While we wait on the denouement of the debate on the NCTC in India, the country faces existential threats related to terrorist financing. These threats need to be attended to and dealt with in order to help prevent future terrorist attacks in India. Certain issues merit urgent attention in this regard.

First and foremost, the Indian law enforcement agencies need to investigate very thoroughly the means that terrorists/criminals use to source, launder, move, store, and deploy funds. This information could be obtained by open sources, credible intelligence, and through thorough investigation of arrested terrorists and their financiers/facilitators. Secondly, law enforcement agencies should share this information with the Indian Financial Intelligence Unit, FIU-India. Thirdly, FIU-India may like to share with the Indian law enforcement agencies the analysis of the information it collects from financial institutions via Suspicious Transaction Reports (STRs) and

Cash Transaction Reports (CTRs). This two way information sharing process is of paramount importance as it serves a three-fold objective—namely, the development of typologies for terrorist financing/money laundering that can then be shared with the financial institutions to inform and educate them on what transactions should be labeled suspicious and deserve further investigation; provide crucial information for successful prosecution and conviction of terrorist financing/money laundering offenses; and reduce the defensive filing of STRs by financial institutions—a cost consuming exercise that ends up adding to their regulatory burden and wasting precious manpower and financial resources. From all accounts, the lack of convictions/prosecutions has been a serious drawback for the CFT efforts in India thus far. A couple of recent developments potentially could bring cheer to proponents of seamless information sharing. The recent approval in principle by the Cabinet Committee on Security for the setting up of a National Intelligence Grid to streamline information sharing amongst intelligence agencies, law enforcement organizations, and other Government Departments is a good step in this direction. So is the completion of the design and development of core software for the Crime and Criminal Tracking and Network System, thus bringing the system for tracking criminal records that much closer to operational status.

Information Sharing in the CFT Realm in India and U.S.-India Collaboration

U.S.-India collaboration in information sharing relating to India’s CFT efforts has proven to be remarkable and encouraging. There is much that the Indian CFT community can learn and is learning from the domain expertise of the United States as far as CFT efforts are concerned. Through ministerial level contacts, two-way official visits, and the institutional mechanism of the U.S.-India Counter Terrorism Joint Working Group, the avenues for U.S.-India information sharing relating to terrorist financing have expanded over the years. While the U.S. has signed a Mutual Legal Assistance Treaty (MLAT) with the Indian Government to facilitate exchange of information and evidence on criminal matters including banking and other financial records relating to money laundering cases, there may be an additional need for the Financial Crimes Enforcement Network and FIU-India to ink a Memorandum of Understanding (MOU) which would potentially further boost information sharing relating to best practices and operational experiences between the two FIUs. The Federal Bureau of Investigation (FBI) has provided terrorist financing instruction to participants from India. Financial supervisors from India attended the AML/CFT School run by the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) to increase their knowledge of money laundering and terrorist financing typologies and to improve

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their ability to examine and enforce compliance with national AML/CFT laws. In partnership with the U.S. Department of State, the Federal Deposit Insurance Corporation (FDIC) has offered training sessions on AML/CFT issues to representatives from several countries including those from India. In addition, the FDIC met with a representative from the Insurance Regulatory and Development Authority of India to discuss issues relating to AML policies and procedures, the USA PATRIOT Act rules, SAR reporting requirements, and government information sharing mechanisms. Over the past few years, India and the United States have also engaged in a dialogue whereby India is trying to acquire U.S. technology to detect counterfeit currency—a long term crucial focus of its CFT efforts.

Despite India’s recent efforts to spruce up its CFT initiatives, the lack of prosecutions/convictions/case law relating to CFT brings out an urgent and dire need for quantum improvements in investigative/prosecutorial capacity in this respect. From the U.S. perspective, this may explain the perceived inability on the Indian side to use the intelligence and investigational information provided to successfully prosecute terrorist financiers in India. Perhaps the law enforcement authorities in the U.S. and India could work together on training programs

whereby the U.S. law enforcement agencies could share some of their expertise in this area, thus helping

build Indian investigatory capacity.

Conclusion

This piece has offered an insight into the criticality of information sharing in building and implementing effective CFT measures in India. It is indeed heartening to discover that India is fast realizing this criticality and is working steadfastly to beef up its CFT efforts and its attendant information sharing processes. Even more productive is the ongoing collaboration through information sharing that the U.S. and India are witnessing in this realm.

* Dr. Amit Kumar is the Fellow for Homeland Security and Counterterrorism at the Center for National Policy; Adjunct Associate Professor at the Security Studies Program at Georgetown University’s Edmund A. Walsh School of Foreign Service; and Adjunct Senior Fellow at the Center for Infrastructure Protection and Homeland Security at George Mason University’s School of Law. v

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